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Schneider said to mull bid for Tyco

PARIS—Schneider Electric, based here, is working with bankers to assess a bid for Tyco International, according to an April 11 Bloomberg report, which cited “three people with knowledge of the matter.”

Tyco spokesman Paul Fitzhenry declined comment, and a spokesperson for Schneider Electric on April 13 issued a statement saying it is not currenlty in talks with Tyco regarding a potential strategic transaction between the two companies.

The deal is in the early stages and is not imminent, according to the report.

Schneider, a $46 billion company, is considered the world’s largest maker of circuit breakers. It’s also known for industrial automation, energy management systems and security offerings. Its competitors include Seimens of Germany and ABB of Switzerland.

Should the deal come to fruition, Schneider would be the world’s biggest manufacturer of security systems and this deal would rank as the biggest industrial takeover on record by a European company, according to Bloomberg.

Niall Jenkikns of iMS Research told Security Systems News:“Although Schneider Electric have denied they are currently in talks with Tyco, if the acquisition was to happen it would create the world’s biggest video surveillance equipment vendor. Additionally, it could also be complimentary for the systems integration businesses, with Schneider Electric focused on the enterprise market and ADT, the Tyco subsidiary, primarily focused on the retail and commercial markets.”

The deal faces some obstacles, according to analysts, including the assumption that Schneider would need to secure equity and debt financing to purchase Tyco, which could command as much as $32 billion, according to a note issued by Carol Levenson of Gimme Credit, and reported by Bloomberg.

“We doubt that Tyco, wishing to remain independent, would go quietly, and a hostile bid would likely require a high premium and considerable cash,” Levenson wrote in the note.